ERP Glossary - P: Packing Slip to Premium Freight

Packing Slip

A detailed list of what has been shipped to the customers, that physically accompanies the goods. A packing slip differs from a bill of lading because a packing slip is designed to convey important business or consumption information about the shipment to the customer, whereas a Bill of Lading focus more on the legal and financial aspects of title transfer, and financial liability.

Paradigm

A clear framework for assigning data and observation to existing theories; a way of thinking about things. In business, rigid adherence to a paradigm can blind executives to threats or opportunities. An example of a paradigm was the belief that the only practical way to sell merchandise was in a store, not over the internet.

Parallel

In ERP, parallel refers to running two different computer systems simultaneously (or if not in the same time frame, then using the same input data) to see if both systems produce similar results. When feasible, running a parallel is always a large confidence-builder and should be considered when testing your ERP system.

Pareto's Law

Named after the nineteenth century Italian economist who first identified the phenomena that 80% of the end result of a process often came from 20% of the input; 80% of a country's wealth was in the hands of 20% of the people; 80% of a company's revenue comes from 20% of its skus. The percentages are not always precise, but directionally, Pareto's Law is conceptually useful.

Part Numbers

Part numbers, also known as material numbers, are unique identifiers that give a numeric or alphanumeric name to every sku. Part numbers may or may not convey useful information from their format.

Payback

The length of time it is expected to take for an investment to return a cumulative cash flow equivalent to the original investment. In simplistic terms, an investment of $1,000,000 that is expected to increase income by $200,000 a year would have a five year payback.

Physical Inventory

The process of identifying and normally marking each individual inventory container, and recording the amount on a piece of paper, until every unit of inventory in a location has been marked and recorded. The companion to a physical inventory is a book inventory, which is the running total of all of the adds to, and subtractions from, a given inventory bucket.

Pick List

A pick list is a detailed set of instructions for the type and quantity of products that need to be retrieved from the warehouse and brought to a truck or staging area. In a large warehouse, picking can be a substantial cost, so a pick list arranged for maximum efficiency can have a noticeable positive effect on performance.

Planning Equation

The fundamental math underpinning to MRP, expressed as “order=(demand – inventory)”.

POS

Point of Sale Point of sale is the time and place of a sales transaction exchanging cash (or credit) for goods or services, most common as a reference point in retail sales, where it is also known as a "cash register transaction". Point of sales as an event became interesting to supply chain collaborators as a means to communicate demand signals to the entire supply chain in real time.

Premium Freight

This is the additional cost charged by a freight carrier to guarantee a faster-than-normal delivery, either by inefficiently dedicating a truck and trailer; by utilizing a non-standard shipping method, or simply by expediting it through the normal process. Premium freight costs can often be substantial when there is a disruption in a just-in-time supply chain, such as is typical in the automotive industry.

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Tom Feltham

About the author…

Tom Feltham was Editor at ERP Focus for three years from 2013-2016. Tom still keeps tabs on the ERP software market and occasionally puts pen to paper when inspiration strikes.

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Tom Feltham